No surprises – reaction to Microsoft buying Nokia’s handset bit

Microsoft now has Nokia’s licensing deal with Qualcomm to play with

direct route into emerging markets - tziokas

Oh, the power of the Press! Only nine days after GoMo News wrote this, ‘Plea to Ballmer – can you take Elop back please?‘, he has obliged. Elop is now going back to Microsoft as an executive vp for Nokia Devices & Service. If you remembered what Microsoft did to Brit handset manufacturer, Sendo, you’d have known that this was on the cards. Elop has done his job of depressing the price of Nokia’s shares and Microsoft has got the former No: 1 handset maker at a bargain $7.17 billion. Probably the most important part of the deal from Microsoft’s perspective is it acquires Nokia’s existing arrangements with chip maker, Qualcomm. No more reliance on Intel.

Actually, the biggest loser here is BlackBerry. If you can get the handset making bit of Nokia for just under $5 billion (see the official release here), then how much would you pay for a Tier Two handset maker like BlackBerry?

Anyway, the area which all of this affects most is emerging markets. As Ronan de Renesse, Analysys Mason principal analyst, observes, “Microsoft will gain a foothold in developing market via Nokia’s non-Lumia device portfolio – 45.5 per cent of Nokia mobile device shipments went to Greater China, Middle East & Africa and Latin America in 2012.”

“This will strengthen Microsoft’s position versus Google in connecting the next billion people,” de Renesse added.

Ironically, it has also created a big opportunity for Microsoft is in the non-smartphone space because Microsoft is obviously going to continue to use the Asha platform.

After all, Elop’s mission at Nokia was just to kill off Symbian to make way for Windows Phone.

But if you want to produce dirt cheap smartphones, the easiest way is to abandon the Windows licensing model in mobile.

After all, no handset manufacturer except Nokia has been fully committed to Windows Phone platform in the past 12 months.

What many Western based mobile industry pundits overlook is that Nokia is the second most-coveted brand behind Samsung in the emerging markets with 22 per cent said they would like to own a Nokia device.

That stat is taken from The Upstream Emerging Markets Mobile Attitudes report 2013. The research was conducted with YouGov and Vanson Bourne, polling 3,670 respondents across Nigeria, Brazil, India and Saudi Arabia.

Vasileios Tziokas, marketing manager with Upstream, says, “The decision to acquire Nokia’s phone business gives the company a direct route into the emerging markets.

“Whilst the immediate focus for Microsoft is on hardware, having control over the device itself will mean that its other services, such as its Bing search engine can be preinstalled on the devices, which may eventually challenge Google’s Android stronghold in these regions.”

And cheap handsets is what the emerging markets want. UpStream found that 28 per cent of emerging market consumers want a device priced in the $1-$150 bracket.

The catch is that Elop might have done his job of depressing the cost for Microsoft to acquire Nokia’s IPR too effeciently.

As Victor Basta, managing director of Magister Advisors, observes, “The burning question, of course, is whether Nokia’s gradual erosion – in market share, value and perception – can be reversed?”

Basta continued, “There is fierce competition in the market and the competitor set in mobility has changed as fundamentally.”

He concludes, “A ‘me too’ strategy – catching up with Apple is not likely to succeed. Microsoft needs its own strategy in the marketplace, and [acquiring] Nokia alone will not deliver that strategy.”

About Tony Dennis

Tony is currently Editor of GoMobile News. He's a veteran telecoms journalist who has previously worked for major printed and online titles. Follow him on Twitter @GoMoTweet.
This article was published in Bing, India and Asia Pacific, Intel, Microsoft, android, nokia, qualcomm and tagged , , , , , , , . Bookmark the permalink.

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